European Central Bank publishes co-badging analysis highlighting digital euro acceptance benefits and checkout friction risks

The European Central Bank has published a technical deep dive on co-badging under the ERPB Fit in the Ecosystem workstream, presented without prejudice to present or future applicable regulation. The paper examines how a digital euro could sit alongside existing payment brands on the same physical card and concludes that co-badging could broaden acceptance through established networks, help domestic schemes use a pan-euro area acceptance network, and reduce international card scheme fees and dependence on non-European schemes for euro-area cross-border transactions. It also finds that adding the digital euro would introduce account-selection issues at checkout because different applications on the same card could debit different accounts. The analysis notes that current co-badged cards usually link to a single bank account, so brand selection affects routing rather than the account debited. Adding a digital euro application would change that, with one option debiting commercial bank money and another the digital euro account. For contact payments, the ECB contrasts current merchant pre-selection, which users rarely override and which can create misalignment or rejected transactions, with a model that always offers brand choice on the POS, an approach already used in Finland for co-badged debit and credit cards of the same brand. For contactless payments, it compares a merchant-preselected tap-and-go model with a tap plus choice plus tap-and-go model requiring two taps, and says any multi-account design must balance transparency over which account is charged against the need for a fast, low-friction checkout.